Online
Vijaya Bank
BSE: 532401 | NSE: VIJAYABANK | ISIN: INE705A01016 | Banks - Public Sector
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
The Board of Directors have pleasure in presenting the 28th Annual
Report of the Bank along with the Audited Balance Sheet as on March 31,
2008 and the Profit and Loss Account for the year ended March 31, 2008.
MANAGEMENT DISCUSSION AND ANALYSIS
1. Economic Scenario
Growth trends in the Indian economy remained robust during 2007-08,
well supported by strong fundamentals and effective policy intervention
as well as course correction. However, growth in the real sector
featured slackened momentum, well dispersed over the four quarters.
Growth of real GDP for 2007-08 was placed at 8.7 per cent by the
Central Statistical Organization in its advance estimates released
during February 2008, showing some moderation compared to 9.6 per cent
growth recorded in 2006-07.
Real GDP originating in agriculture and allied activities is estimated
to have risen by 2.6 per cent in 2007-08 - lower than 3.8 percent
registered in the preceding year. Foodgrain production is expected to
have increased to an all-time high of 227.3 million tonnes. Real GDP
emanating from industry rose by 8.6 per cent in FY 08 as compared with
10.6 per cent in the previous year. In manufacturing, which contributed
89 per cent of incremental industrial production, the growth of output
was lower at 9.1 per cent than 12.2 per cent recorded a year ago.
Output of the six key infrastructure industries also registered a lower
growth of 5.6 per cent during April - February 2007-08 as against 8.7
per cent for the previous corresponding period.
Real GDP from services sector rose by 10.6 per cent during 2007-08
compared with 11.2 per cent in 2006-07. Activity in construction and
financing, insurance, real estate and business services sector expanded
by 9.6 per cent and 11.7 per cent respectively, as compared with 12 per
cent and 13.9 per cent in 2006-07. Growth of trade, hotels and
restaurants, transport, storage and communication was 12.1 per cent in
2007-08, marginally higher than 11.8 per cent recorded in 2006-07.
Thus, during 2007-08, almost all segments of the real economy exhibited
moderation.
Qn a year-on-year basis, inflation based on the Wholesale Price Index
(WPI) stood at 7.4 per cent at end-March 2008 as compared with 5.9 per
cent a year ago. On an annual average basis, however inflation at 4.7
per cent during 2007-08 was lower than 5.4 per cent in the previous
year. The rise in headline inflation during the last quarter was
driven by firming up of food and metal prices at the global level,
domestic supply constraints and also due to rise in aggregate demand
conditions.
Money Supply (M3) increased by 20.7 per cent in 2007-08 vis-a-vis the
targeted 17-17.5 per cent and a 21.5 per cent growth registered in
2006-07. Reserve Money increased by 30.9 per cent compared to 23.7 per
cent in 2006-07, mainly due to high accretion in RBIs foreign currency
assets and significant growth in bankers deposits with Reserve Bank of
As regards developments in the external sector, Indias merchandise
exports (in US Dollar terms) during April - December, 2007 increased by
24.6 per cent, up from 23.9 per cent in April - December, 2006. Export
growth was driven mainly by petroleum products, engineering goods and
gems and jewellery. During April - December 2007, merchandise import
growth accelerated by 27.9 per cent (27.7 per cent a year ago), mainly
due to 29.9 per cent growth in non-oil imports. As a result,
merchandise trade deficit increased to US$ 66.5 billion during April -
December 2007, up from US$ 50.3 billion in the corresponding period of
2006-07.
There was substantial accretion of US$ 67.2 billion to foreign exchange
reserves during April - December 2007 as against US $ 16.2 billion in
April - December 2006. Net portfolio flows on account of investments by
Fits surged to US $ 20.3 billion in 2007-08 from US $ 3.2 billion in
the previous year. Net inflows in the form of FDI rose to US $ 25.5
billion in April - February 2007-08 from US $ 19.6 billion a year ago.
As at end March 2008, foreign exchange reserves increased by US $ 110.5
billion to US $ 309.7 billion, with generally orderly conditions
observed in the foreign exchange market. This was due to an exchange
rate policy that was guided by the broad principles of careful
monitoring and management of exchange rates with flexibility and
ability to make timely intervention.
2. Banking Scenario
Overall moderation in the real sector activities was reflected in the
evolution of banking developments in 2007-08. Non- food credit extended
by the Scheduled Commercial Banks increased by 22.3 per cent as
compared with 28.5 per cent in the previous year. Incremental non-food
credit deposit ratio for the banking system declined to 72.3 per cent
from 83.2 per cent in 2006-07, 109.3 per cent in 2005-06 and 130 per
cent in 2004-05.
Provisional information on sectoral deployment of bank credit point to
high growth, albeit moderated, in credit to services sector (28.4 per
cent), followed by industry (25.9 per cent) and agriculture (16.4 per
cent). On the other hand, growth in personal loans decelerated to 13.2
per cent, with similar trend observed in housing and real estate.
Within industry, there was sizeable credit pick-up in respect of
infrastructure (42.1 per cent), food processing (32 per cent ) and
engineering (26.2 per cent). Credit to industry constituted 45.2 per
cent of total expansion in non-food bank credit up to February 2008,
followed by services (29.8 per cent), personal loans (15.8 per cent)
and agriculture (9.2 per cent).
Aggregate Deposits of Scheduled Commercial Banks increased by 22.2 per
cent during 2007-08 as compared with 23.8 per cent in the previous
year. Banking systems lendable resources were also augmented
substantially by Capital raised through Public Issues and innovative
capital instruments.
While the banking sector remained largely immune to the sub-prime
crisis, adequate emphasis was bestowed on ways to prevent any contagion
effect of similar nature. Besides, the year also saw many of the public
sector banks bring down lending rates across various segments so as to
step up lending to productive sectors. However, towards the end of the
financial year, there was considerable upward pressure on interest
rates in the face of relatively high inflation and rise in benchmark
yields.
3. Quilflfih
Global economic outlook has worsened since end-January 2008. In April
2008, IMFs forecast for global growth in 2008 has been lowered by 1.2
percentage points and by 1.1 percentage points for 2009 from the April
2007 projections, in the face of recessionary pressures in USA and the
financial turmoil in the aftermath of the sub-prime meltdown.
Continued margin pressures constitute one of the most daunting
challenges to the banking sector in year 2008- 09, necessitating many
banks to rebalance their business portfolio for retaining the margins.
Some of the other challenges in banking relate to implementation of
Basel II framework, stepping up of core Other Income and improvement
in overall profitability in- the face of volatility in capital and
money markets. Year 2009 also marks the beginning of foreign banks
making deeper forays into Indian market and as such, there could be
greater competitive forces in the banking sector.
With a vibrant capital market, the Indian corporates are likely to step
up their access to the primary market to raise resources both through
equity and debt routes. Along side, the overseas issues (ADR / GDR) too
are expected to gain prominence to supplement the domestic resource
mobilisation by the corporates. The spate of M & A could continue in
2008-09 as well necessitating banks to fund industry consolidation both
within and outside the country.
Despite the expected slowdown in global growth, the strong fundamentals
of the Indian economy in tandem with healthy growth outlook in key
segments are likely to help in sustaining the interest of domestic and
foreign investors in the Indian market. Indias prolonged policy stance
of keeping the reform agenda a careful and calibrated one would also
add to the resilience of its Banking System in the medium term.
Last, but not the least, RBI guidelines to banks under Corporate Social
Responsibility, Sustainable Development and Non-Financial Reporting,
explain the term sustainable development as the advancement of
economic development while maintaining the quality of environment and
social systems. This will be a major challenge for the Indian banking
system while enabling growth in a non-disruptive and eco-friendly
manner. More green field ventures could gain prominence, helped by the
emergence of concepts like carbon credit so as to conform to a
sustainable growth paradigm.
VIJAYA BANKS PERFORMANCE IN 2007-08
4. Capital Structure
The category wise distribution of shareholdings as on March 31, 2008 is
given in Table-1 and Table-2 below:-
TABLE-1
Category wise distribution of shareholding as on 31.03.2008
Percentage
SI. No. of Shares No.of
No. Category held shareholding
(%)
A Promoters Holding
Promoters
- Indian Promoters 23,35,17,800 53.87
(Govt, of India )
1 - Foreign Promoters - -
2 Persons Acting in Concert - -
Sub-Total 23,35,17,800 53.87
B Non - Promoters Holding
3 Institutional Investors
a) Mutual Funds & UTI 29,84,945 0.69
b) Banks, Financial
Institutions, Insurance
Companies (Central / 3,24,12,715 7.47
State Institutions / Non-
Government Institutions)
c) Flls 6,45,62,283 14.89
Sub - Total 9,99,59,943 23.05
4 Others
a) Private Corporate Bodies 1,39,24,989 3.21
b) Tndian Public 8,40,99,731 19.40
c) NRIs / OCBs 20,15,329 0.47
d) Any Other - -
Sub - Total 10,00,40,057 23.08
[GRAND TOTAL 43,35,17,800 100.00
TABLE - 2
Total foreign shareholding as on 31.03.2008
Sl. Number of Percentage of
No Particulars Shares Shareholding
1 GDR& ADR holding Nil Nil
2 Foreign Promoters Nil Nil
3 Foreign Institutional 2,00,90,805 4.63
Investors
4 Foreign Mutual Funds 4,44,71,478 10.26
5 NRIs 20,15,329 0.47
6 Foreign Banks Nil Nil
7 Foreign National Nil Nil
Total 6,65,77,612 15.36
The list of shareholders holding more than 1% of share of the Bank as
on 31.03.2008 is furnished below.
TABLE - 3
SI. Name of share No. of shares
No. Holder Held
1 Govt, of India 23,35,17,800
2 TCI Cyprus Holding 1,52,26,212
Limited
3 Morgan Stanley & 1,41,23,072
Co. International Ltd
4 Copthall Mauritius 1,39,32,073
Investments Ltd
5 Life Insurance 1,35,51,170
Corporation of India
6 Credit Suisee 1,31,12,072
(Singapore) Limited
7 LIC of India Money 61,97,558
Plus
Percentage Category
(%)
53.87 Indian
Promoter
3.51 FMF
326 FMF
3Til Fle
3.13 Govt.
Sponsored
Financial
Institution
3102 FMF
1.43 Govt.
Sponsored
Financial
Institution
5. Capital Adequacy
The capital adequacy ratio stood at 11.22% as on March 31, 2008
vis-a-vis the Reserve Bankof India normof 9%. The Bank raised Lower
Tier-ll Capital amounting to Rs.400 Crore and upper Tier-ll capital of
Rs.300 crore during the year, with a view to augmenting the long term
resources and also for fulfilling the capital adequacy requirements in
the face of high and broad-based growth in advances.
6. Working Results
2007-08 witnessed considerable volatility in the Bond and Equity
markets, especially during the last quarter. Although for most of the
year, Indian markets remained reasonably resilient to the global
triggers like US-Sub prime, rise in crude and commodity prices and the
impact of slow down in the US economy, there was considerably
volatility in the Bond Market during the last fortnight of the year.
Liquidity constraints led to hardening of yield across the bond
maturities while in the equity market, market index was affected by the
moderation in FN inflows and overall corporate performance. As a
result, like in case of other banks, the Bank had to book depreciation
in its market to market investment portfolio.
Net Profit posted by the Bank for the year 2007-08 amounted to
Rs.361.28 Crore as compared to Rs.331.34 Crore in 2006-07, recording a
growth rate of 9.03%, while the operating profit for the year 2007-08
was Rs.660.88 Crore as compared to Rs.696.02 Crore in 2006-07. On the
resource mobilisation front, average cost of deposits increased from
5.49% in 2006-07 to 7.13% in 2007-08. Yield on advances recorded a 118
bps increase from 9.20% in 2006-07 to 10.38% in 2007-08. As a result,
the average interest spread has declined from 3.00% in 2006-07 to 1.94%
in 2007-08 which however is in keeping with the industry trend.
A key component of Banks earning indicators related to a 59 per cent
growth in Other Income that partially offset the decline in Nil.
Movement in profit volumes and key profitability parameters was
influenced by the trend in Net Interest Income [Nil] and continued
pressure on margins. Return on Average Assets, a measure of
profitability, worked out to 0.75 per cent. The trends in financial
results of the Bank are highlighted in the Tables below :
TABLE- 4
Income-Expenditure Parameters
(Rs. in crore)
SI. Income - Expenditure 2006-07
No. Heads
1. Interest Income 2823.11
2. Interest Expenditure 1751.16
3. Net Interest Income (1-2) 1071.95
4. Non-interest income (5+6) 274.79
5. Profit on sale of investments 74.71
6. Other non-interest income 200.08
7. Net Total Income (3+4) 1346.74
8. Staff Expenses 392.14
9. Other operating expenses 258.58
10. Operating expense (8+9) 650.72
11. Operating profit (7-10) 696.02
Operating profit (excl.
12. Treasury profit and 683.22
Amortisation of Investment)
13. Provisions and Contingencies 364.68
14. Net profit 331.34
Annual
2007-08 increase
(%)
3983.42 41.10
3058.42 74.65
925.00 (13.71)
437.15 59.09
210.19 181.33
226.96 13.43
1362.15 1.14
404.92 3.26
296.35 14.61
701.27 7.77
660.88 (5.05)
545.56 (20.15)
299.60 (17.85)
361.28 9.03
TABLE- 5
Important Profitability Ratios
SI. Profitability Parameters 2006-07 2007-08
No.
1. Yield on advances 9.20 10.38
2. Yield on investments 7.93 7.59
3. Yield on funds 7.90 8.35
4. Cost of deposits 5.49 7.13
5. Cost of funds 4.90 6.41
6. Interest spread (3-5) 3.00 1.94
7. Other operating expenses to Average 0.72 0.62
working funds
8. Cost to Net Total Income 48.32 51.48
9. Non-interest income to Net total income 20.40 32.08
10. Establishment cost to average working 1.10 0.82
funds
7. Dividend
Taking into consideration the overall profitability position, the Board
of Directors have recommended a final dividend of 20% for the year
ended March 31, 2008, amounting to Rs. 86.70 Crore (excluding Tax).
8. Branch Network
Branch expansion continued to receive overriding policy thrust during
2007-08. During the year, the Bank opened 73 new branches including 5
Extension Counters upgraded into full fledged branches. Total number of
branches increased from 978 in March 2007 to 1051 in March 2008, spread
over 28 States and 4 Union Territories. Out of the 73 new branches
opened, one was a Specialised SME branch and 17 are in Minority
Concentration Districts (MCD). The year under review featured several
milestones one of which related to inauguration of the Banks 1000th
branch at Mulki Sunder Ram Shetty Nagar, Bangalore by Shri P.
Chidambaram, Honble Union Finance Minister, Government of India. The
1001st branch of the Bank was inaugurated by Shri V. Leeladhar, Deputy
Governor, Reserve Bank of India at Mangalore. Total number of Extension
Counters stood at 47. The population group-wise break up of branches
and category-wise break up of Specialised branches are furnished in the
Table below:-
TABLE - 6
CATEGORY-WISE BRANCHES AS ON MARCH 31, 2008
Category Number
(Population- of
Group) branches
Rural 261
Semi-urban 214
Urban 319
Metropolitan 257
Total 1051
Specialised branches
Number of
Category branches
Commercial Personal 78
Banking
SME 11
Asset Recovery 07
Capital Market 03
Services
Industrial Finance 03
Overseas 05
Corporate Banking 01
Total 108
9. Deposit Mobilisation
Total Deposits of the Bank increased from Rs.37604.50 Crore as on March
31, 2007 to Rs.47952.01 Crore as on March 31, 2008 recording an annual
growth rate of 27.52%. The fortnightly average deposits recorded a
higher growth rate of 33.58% to move up from Rs.30391.10 Crore in
2006-07 to Rs.40595.54 Crore in 2007-08. During the year, the Bank
initiated several innovative measures to increase the quantutn of core
deposit as well as the customer base, more particularly under the low
cost Current and Savings Bank deposits.
In order to boost the low cost deposit base and build-up long-term
relationship with Generation Next, the Bank launched an innovative
Savings account product Viz., V-GenUTH Savings Bank Account, for
catering to various financial needs of children / students. This
special account, unveiled by Honble Union Finance Minister, has since
evoked overwhelming response across the country. During the year, four
special campaigns for mobilizing Current account and Savings Bank
account deposits (CASA) were conducted, resulting in accretion of
6,95,703 new CASA accounts including 2,09,940 accounts under the newly
launched V-GenUTH Savings Bank account leading to overall mobilisation
of Rs.1037.82 crore. The share of low cost deposits in total deposits
worked out to 27.3% as at March 31, 2008.
10. Credit Expansion
Gross Advances of the Bank increased from Rs. 24643.91 Crore as at
March 2007 to Rs.32019.10 Crore at March 2008 recording an annual
growth rate of 29.93% as against 21.6% recorded by Scheduled Commercial
Banks during 2007-08. The average (fortnightly) gross credit, recorded
an annual growth rate of 35.9% from Rs. 19172.02 Crore in 2006-07 to
Rs. 26056.88 Crore in 2007-08. Growth in advances was broad based, with
added focus on lending to productive segments.
Infrastructure Finance
Outstanding advances to infrastructure sector increased from Rs 2955.86
Crore as at March 2007 to Rs.6093.27 Crore as at March 2008 registering
a growth rate of 106.14%. Power, Roads, Ports, Airports, Industrial
Parks, SEZ, Pipelines for gas / petroleum products transportation,
Telecommunication were the major segments under infrastructure that
were financed by the Bank.
Retail Credit
The Bank continued to accord priority to its retail lending scheme,
including education and housing loan, in view of the potential therein
and unprecedented rise in the purchasing power especially of the middle
income segment. However, for the banking system as a whole, retail
credit growth featured slackness during 2007-08.
As at March 31, 2008, outstanding retail advances of the Bank stood at
Rs.8423.90 Crore compared to Rs.7447.28 Crore a year ago, signifying a
growth of 13.11%. Retail portfolio accounted for 26.31% of the Banks
gross credit. Retail disbursements during the year were of the order
of Rs. 3079.42 Crore.
Priority Sector Lending
Bank has been doing exceedingly well over the years in the realm of
priority sector lending. Total Priority Sector advances of the Bank
increased to Rs.11536 crore as at March 2008, constituting 46.81% of
the Adjusted Net Bank Credit, as against the RBI stipulation of 40%.
Advances outstanding in the priority sector signified a healthy
year-on- year growth of 15.86%.
Agricultural Finance
Outstanding agricultural advances of the Bank as at March 2008 stood at
Rs.3959 Crore, constituting 16.07% of the Adjusted Net Bank Credit,
registering a year-on-year growth of 23.22%.
Under Special Agricultural Credit Plan, the Bank disbursed Rs.2744
Crore during the year 2007-08, while under Vijaya Kisan Card scheme,
the Bank issued 39767 cards with credit coverage of Rs.298 Crore.
During the year, the Bank financed 46100 new farmers, involving
financial assistance to the tune of Rs.231 crore. The average number of
new farmers financed per rural and semi urban branch of the Bank worked
out to 103, as against the Govt, of Indias stipulation of a minimum of
100 new farmers per rural and semi urban branch.
Financing of Micro Small and Medium Enterprises (MSME):
As per the directives of Govt, of India, advances under the Micro,
Small and Medium Enterprises (MSME) are to be doubled within five years
ending by 2009-10. The Bank has already surpassed the said target in
March 2008 itself by achieving an outstanding advances level of Rs.3468
Crore to MSME segments, signifying a year-on-year growth of 83.6%.
Advances to Weaker Sections:
As at March 2008, outstanding advances to weaker section categories
under Priority Sector stood at Rs.1544 Crore, recording 10.45% growth
year-on-year.
Finance to Self Help Groups (SHGs):
SHG finance has been a major forte of Vijaya Bank all through, earning
awards and accolades at various levels. During the year 2007-08, the
Bank extended finance to 16469 SHGs amounting to Rs.107 Crore.
Cumulatively, the Bank has so far financed 55894 SHGs amounting to
Rs.259 Crore. During the year 2007-08, Banks Malavalli Branch received
an award by NABARD in recognition of high SHG linkage for the year
ended March 2007. Further, a Certificate of Merit was issued by Honble
Chief Minister of Andhra Pradesh to the Bank in recognition of its
exemplary record of financing Self Help Groups in East Godavari
District for the year ended March 2007.
Financial Inclusion :
Bank actively co-ordinated with all the banks in its lead districts,
namely, Mandya, Dharwad and Haveri in Karnataka and successfully
completed the first phase of the financial inclusion programme. In
other States as well, the Bank actively participated in the programme.
In the first phase, the Bank opened 1,69,453 Vijaya Saral Savings
Accounts, the No Frill account scheme, introduced to provide basic
banking to those financially excluded. In the second phase of the
programme, the Bank has taken forward the initiative by extending
Vijaya General Credit Cards and other need based credit facilities to
such families. Initiatives were also taken to implement, on a pilot
basis, IT enabled Financial Inclusion through Business
Correspondent/Smart Cards to provide banking facilities at their door
steps.
Credit to Women Beneficiaries:
As against the stipulated benchmark of 5% of Adjusted Net Bank Credit,
Banks advances to Women beneficiaries as at March, 2008 stood at
Rs.1652 Crore, constituting 6.7% of Adjusted Net Bank Credit.
Advances to SC / ST beneficiaries:
Total advances to SC / STs stood at Rs.434.71 Crore as at March 2008,
as against Rs.345.55 Crore as at March 2007, showing an increase of
Rs.89.16 crore (25.8%) during the year. Recovery position in respect of
advances to SC/ST clients stood at an impressive Rs.7.25 Crore during
the year 2007-08.
Credit to Minority Communities:
Advances to Minority Communities under Priority Sector stood at Rs.906
Crore as at March 2008 constituting 7.86% of total Priority Sector
advances.
Lendinas under Govt, sponsored Schemes:
The Banks lendings under various Govt, sponsored schemes are furnished
below:
(Rs. in crore)
Loan amount
SI. Target Groups/ No. of
No outstanding as
Schemes beneficiries at March 2008
1. PMRY 21252 129.55
2. SGSY 4912 20.54
3. SJSRY 4373 15.80
4. DRI 566 0.55
5. SLRS 603 2.36
Education Loan:
Outstanding Education loans extended by the Bank stood at Rs.310 Crore
as at March 2008, as against the level of Rs.209 Crore as at March
2007, registering a growth rate of 48.33%. During the year, the Bank
also implemented the Online education loan model to further the
aspirations of budding professionals in an expeditious manner.
Vijava Rural Development Foundation:
Vijaya Rural Development Foundation (VRDF) was promoted by the Bank in
1990 at Mangalore. The Foundation has been promoting and fostering
scientific, educational and extension activities in the field of
agriculture and rural development. During the year, VRDF conducted 48
training / awareness programmes, covering a wide range of
subjects, benefiting 3187 persons. Free health camps were organised for
the benefit of rural poor. The Foundation also granted scholarships to
meritorious poor students hailing from villages and studying in
Government schools. The Foundation also expanded its activities to
other districts like Haveri, Dharwad and Mandya, where the Bank has
Lead Bank Responsibility and also in Chitradurga and Hassan districts
of Karnataka State.
VIBSETIs (Vijaya Bank Self-Emplovment Training Institutes):
The Bank has established two self-employment training institutes called
Vijaya Bank Self Employment Training Institute (VIBSETI) in Mandya and
Haveri Districts. These training institutes have been regularly
conducting various vocational training / skill-upgradation / awareness
programmes and product development workshops etc., for the benefit of
rural unemployed youth to enable them to take up self employment
ventures. These two Institutes conducted 136 Programmes, training 4784
beneficiaries during the year. As a post-training exercise, the
Institutes regularly follow up with the trained candidates to ensure
that they successfully take up self employment ventures. The settlement
rate of the Institutes is around 72%. The Institute at Mandya came out
recently with an innovative programme of organizing a series of
motivational programmes /skill development programmes for the
under-trials of Mandya Jail to change their mindset and to kindle their
entrepreneurial qualities so that they can take up productive ventures
when they are discharged. The Institute at Mandya has its own premises
while the Institute at Haveri is going for a new owned premises
shortly.
Visveshvaraya Grameena Bank :
Visveshvaraya Grameena Bank (VGB), a Regional Rural Bank sponsored by
the Bank in 1985, has been making good progress over the years. The
VGB. has a total network of 27 branches in Mandya District of Karnataka
State. As at March 2008, total deposits and advances of the RRB stood
at Rs. 128.26 crore and Rs. 118.59 crore respectively. The financials
of VGB have been quite encouraging and it recorded a net profit of
Rs.2.60 crore for the year ended March 2008.
11. Asset Quality
Prudent management of the Non-Performing Assets continued to be at the
top of the Banks strategic agenda during the financial year under
review. The Bank put in place several measures to contain the level of
NPAs.
i) The Bank introduced a Recovery Management Policy, with flexible
terms for recovery wherein an NPA account is graded, under Modular
Approach and concession in the Rate of Interest is provided for
settlement of dues. Accordingly, adequate powers have been vested with
various functionaries for speedy disposal of the proposals.
ii) The Bank had also introduced Debt Restructuring Mechanism for Small
and Medium Enterprises (SMEs) as per RBI guidelines.
iii) A special scheme was introduced during 2007-08, for the
Agricultural Sector, wherein varying degrees of concession were given
on interest to farmers affected by natural calamities and also for NPA
borrowal accounts. The scheme provides for sanction of fresh advances
to the borrower on closure of the existing account, irrespective of the
sacrifice made.
iv) Recovery Brigades have been formed in all the Branches/ Offices,
comprising all sections of staff members. Road Show thus continued to
be one of the effective ways introduced by the Bank for swift recovery
of dues.
v) The Bank made effective use of the provisions underthe
Securitisation and Reconstruction of Financial Assets & Enforcement of
Security Act (SARFAESI) 2002 which has proved to be an important tool
for ensuring speedy recovery of impaired assets, thereby avoiding
cumbersome exercise of recovery proceedings through legal process.
vi) Vijaya Adalat, a novel scheme, was introduced by the Bank since
June 1, 2006, wherein recovery camps were held covering cluster of
Branches featuring high concentration of NPAs. During the financial
year under review, 804 Vijaya Adalats were held, covering 5339 borrowal
accounts. A sum of Rs.59.14 Crore was settled in the various meets
resulting in cash recovery of Rs.29.53 Crore.
vii) The Bank has devised a scheme for identifying Special Watch
Accounts under Standard Assets. Weak accounts are classified as Special
Watch Accounts and intensive follow up is put in place to initiate
steps for upgradation of these accounts to HC-1, thereby avoiding fresh
accretion of NPAs.
By initiating the above measures, the Bank has succeeded in cash
recovery of Rs.309.20 Crore under NPAs, interest on NPA and write back
from prudentially written off accounts during the year ended March 31,
2008 as against recovery of Rs.281.11 Crore during the previous year.
The Gross NPA of the Bank stood at Rs.511.50 Crore as on March 31, 2008
as against Rs.564.31 Crore a year ago. The Gross NPA to Gross Advances
ratio which stood at 2.29% as on March 31, 2007, declined to 1.60% as
at March 31, 2008. The Net NPA to Net Advances ratio declined from
0.59% as at March 31, 2007 to 0.57% as on March 31, 2008, making the
Banks Net NPA ratio one of the lowest in the industry. The NPA
coverage ratio stood at 64.49% as on March 31, 2008.
Rehabilitation of SME Units:
Rehabilitation of Sick SME Units is undertaken by the Bank involving
rating and concessions extended to potentially
viable units as per RBI Guidelines. In case of eligible units, need
based working capital credit facilities are extended by the Bank.
Adequate delegated powers have also been vested with the field
functionaries for timely sanction of credit facilities and for
extending relief and concessions to the needy, potentially viable SME
Units.
12. Investments and Funds Management
The total investments of the Bank recorded 38.27% growth to increase
from Rs. 12018.41 Crore as on March 31, 2007 to Rs. 16617.32 Crore as
on March 31, 2008. The average yield on investments (including profit
on sale of Investments) during the year worked out to 8.94% as against
8.56% in 2006-07. The liquidity position of the Bank was generally
comfortable throughout the year. The Bank also complied with the
CRR/SLR requirements as stipulated by Reserve Bank of India. In order
to improve the overall yield on the available short term surplus funds,
the Bank deployed the funds in other avenues like units of liquid fund
schemes of mutual funds and availed the arbitrage opportunity by
entering into foreign currency swaps in addition to the call money and
repo lending. The Bank also leveraged the buoyancy in the equity market
by investing in equity linked mutual fund schemes and actively trading
in equities during most part of the year.
Implementation of RTGS & NEFT:
The Bank joined the Real Time Gross Settlement (RTGS) system under the
aegis of Reserve Bank of India on June 14, 2004 and has been
undertaking customer transactions with effect from January 12, 2005. As
on March 31, 2008, 747 branches of the Bank were RTGS enabled.
Vijaya Bank joined the National Electronic Funds Transfer (NEFT) with
effect from December 7,2006. While its Service Branch, Mumbai has been
identified as Nodal Office for the Bank, the implementation and
monitoring of the system is taken care of by Treasury Management
Department at Head Office. Though initially only 5 branches were NEFT
enabled, the facility has been extended to cover all the RTGS branches
with effect from April 3, 2007.
13. Risk Management
In terms of the RBI guidelines, an independent Risk Management
Department has been set up in the Bank to take care of the risk
management activities in an integrated and focused manner so as to be
Basel II compliant by March 2009.
Apart from the Board level sub-committee, known as Risk Management
Committee of the Board (RMCB), the Bank has set up various dedicated
risk management committees, viz.
Credit Risk Management Committee (CRMC), Operational Risk Management
Committee (ORMC) and Market Risk Management Committee (MRMC/ALCO) at
the executive level, headed by the Chairman and Managing Director, so
as to have focused attention on the management of credit, market and
operational risks.
In addition to the Integrated Risk Management Policy document, the Bank
has put in place the associated policies, such as, Business Continuity
Policy and Disaster Recovery Plan, Disclosure Policy, Stress Test
Policy, Collateral Management Policy, Managing Risk on Outsourcing, IT
security Policy, etc. Policy documents are being reviewed periodically
for revision in a need based manner.
Credit Risk
Lending Policy of the Bank is being revised from time to time, to
include among other things, aspects such as risk appetite, risk based
pricing, risk diversification/mitigation strategy, prudential limits,
preferred sector growth strategies, credit approval procedures, etc.,
in tune with the corporate vision and plan of the Bank. With a view to
improving credit quality, the Bank has introduced the concept of
Relationship Managers to review large borrowal accounts beyond a cut-
off limit, as a post sanction follow up and this is in addition to the
Loan Review Mechanism, as an off-site Credit Audit exercise. The Bank
is meeting the RBI requirement that at least 30 ta40% of the credit
exposures should be covered under the Loan Review Mechanism. As a
filtering measure, a Committee Approach is adopted for considering
sanction of credit limits at the Branch, Regional and Head Office
levels, in respect of large exposures.
The Bank has put in place a comprehensive risk rating / scoring system
that serves as a single point indicator of diverse risk factors on the
counter party and for taking credit decision in a consistent manner. A
separate risk scoring model for Housing and other Retail sectors has
also been evolved and put in place so as to ensure higher coverage of
risk rating exercise, which is presently around 89%. Migration analysis
is also carried out on quarterly basis in respect of exposures of Rs.1
Crore and above to get the Probability of Default on different grades.
ALM and Market Risk
Market risk of the Bank is managed by Market Risk Management Committee
(MRMC) / Asset Liability Management Committee (ALCO). Appropriate
tolerance limits have been stipulated for mismatches in different time
buckets, both for managing liquidity and interest rate risks and these
are being monitored at fortnightly intervals. Based on the historical
data, these limits are being revised from time to time, in tune with
RBI guidelines. As per the recent RBI guidelines, steps have also been
taken to ensure granularity in the bucketing mechanism.
The market risk exposure is measured by tools like VaR (Value at Risk),
AGL (Aggregate Gap Limit) and Duration. Single country limits and
group limits for all countries have been put in place to manage and
monitor the country risk. Interest rate risk in the trading book is
identified and measured through Earnings at Risk (EaR). Portfolio
Sensitivity analysis is also conducted and reviewed by the top
management.
Operational Risk
The Bank is currently in the process of institutionalizing the
Operational Risk Management framework by expediting the collection of
loss events data. The policy framework and measurement tools to track
the operational risks are being addressed. The Bank has nominated Risk
Monitors at each of the Regional Offices to act as coordinators between
the Risk Management Department and the branches, in all the activities
pertaining to risk areas, such as, risk rating, loss event data
collection, incident reporting, credit data, etc. At the Regional
level, the Risk Monitors are supported by the Regional Risk Officers.
The Bank has constituted the Business Continuity Management Committee
(BCMC) at the apex level and various emergency response teams at HO/
RO/Branches to oversee implementation and management of the BCP and
related activities.
During the year under review, the Bank commenced Risk Control and Self
Assessment (RCSA) workshops for field functionaries to impart knowledge
on identifying, analyzing and managing risks and controls in various
functional areas.
Basel-ll Preparedness:
With a view to complying with the Basel II Norms, the Bank has been
carrying out parallel run exercise on the capital adequacy calculation
on a quarterly basis. The Bank is in the process of building up
adequate data to enhance MIS to capture risk components. As part of
preparatory mechanism on Basel II, the Bank has also constituted a
Basel II Working Group, comprising executives from various core
departments to work on the related data and other MIS requirements.
With the guidance of external consultant, the Bank is in the process of
procuring suitable software for ALM/FTP/ Market Risk, Credit Risk
Rating, Credit Risk Management, and Operational Risk Management &
Capital Assessment System so as to graduate to advanced approaches as
per the Basel II recommendations.
14. International Banking
Though the Banks operations are confined to the domestic arena,
conscious efforts have been made to improve forex business through
strategic alliances. Foreign exchange turnover increased from Rs.11043
Crore as at March 2007 to Rs.15256 Crore as at March 2008. During the
year, the Bank designated its Gandhidham, Ongole, Nammakal and
Panaji-Goa branches to handle foreign exchange business with a view to
increasing its foreign exchange turnover. Bank also provided SWIFT
connectivity to the above four branches, taking the number of SWIFT
enabled offices to 47. The Foreign Currency Credit Portfolio of the
Bank stood at USD 139.64 Million as at March 2008, registering a growth
of 85.08% over USD 75.45 Million in March 2007. The outstanding Export
Credit of the Bank stood at Rs.1429.51 Crore as at March 2008 as
against Rs.1384.65 crore as at March 2007. Deposits from Non-Resident
Indians stood at Rs.1180 Crore in March 2008, compared to Rs.1263 Crore
in March 2007, which was in keeping with the industry trend of falling
NRI deposit accretion.
15. Merchant Banking & Allied Activities
The Bank is registered with SEBI for Merchant Banking activities as
Category I Merchant Banker, Banker to an Issue, Debenture Trustee,
Depository Participant, etc. The Bank also handles other diversified
activities like marketing of Mutual Funds, Western Union Money Transfer
Services, Payment Banker Assignments and Cash Management Services of
Correspondent Banks and Corporate clients.
During theyear, the Bank acted as Bankers to the Issue of IPOs and
associated itself as Collecting Banker for public/ rights-issue etc.
The Bank also acted as Debenture Trustee for 14 assignments. During
the year, the bank handled 141 Payment Banker assignments on behalf
of customers of Correspondent Banks and our Corporate/PSU Customers.
The Bank offers a wide array of diversified financial products and
other services.
Depository Services:
DP Module of NSDL is installed at the Banks Head Office with back
office support at 54 branches to help investors, customers and general
public having capital market exposure. These 54 branches are located in
major metro/urban cities. Bank is also in the process of commencing
Online Trading as a value addition to its customers.
Money Transfer services:
The Bank is offering payment of Western Union Money Transfer
remittances received from abroad through its 574 designated branches
spread all over the country.
Cash Management Services:
Cheque collection and DD drawing arrangement with Correspondent Banks
are being done through CBS network of the Bank. The Bank is also
extending at par payment of Dividend/Interest/Refund warrant
instruments facility through specified designated branches for
corporate customers of our bank and for private/foreign banks who do
not have the required branch network at specific locations.
Government Business:
The Bank is handling Direct and Indirect Tax collections through its
designated branches across the country. E- payment facility is
available at all the CBS branches for payment of Direct / Indirect
taxes. It is also extending Pension Payment services to retired
employees of Central & State Government Undertakings, Defence and Civil
Services through 715 branches located in the states of Karnataka,
Andhra Pradesh and Kerala and 5 cities, namely, Chennai, Delhi,
Kolkata, Lucknow and Mumbai. The sale of Government of India Bonds,
collection of Public Provident Fund and Senior Citizen Savings Scheme
are also being handled by select / designated branches.
16. Card Business
The Card business of the Bank exhibited good growth during the
financial year with the introduction of new products and value
additions. At the end of the financial year 2007-08, number of credit
cards issued by the Bank stood at 1.43 lakh. Bank is issuing life time
free Credit Cards and also free add-on cards to specific client
segments. The Banks Credit Card turnover as on March 31, 2008 was of
the order of Rs.415.79 Crore compared to a turnover of Rs.344 Crore as
on March 31, 2007. The total number of merchants enrolled by the Bank
as at March 2008 stood at 1597 as against 1106 merchants a year before.
With more and more branches being brought under Core Banking Solution,
there has been good increase in the issue of Debit Cards. Banks
Debit-cum-ATM Card base stood at 3.95 Lakh as on March 31, 2008 with
1.68 lakh cards issued during the financial year 2007-08. The Debit
Card turnover as at March 2008 was Rs.35.41 Crore as against Rs.16.84
Crore as on March 31, 2007. During the year, specially designed ATM
cards for cash withdrawal at Banks ATMs were issued to account holders
of the newly launched V-GenUTH SB account, who are aged above 12 years.
17. Marketing setup
In order to bolster the marketing of retail products, an exclusive
Marketing Cell was set up in the Bank in 2004.
The Cell coordinates the marketing activities of the Marketing Officers
at the field level with the Regional Offices. The V-Genll™ Savings Bank
Account, an innovative product targeting the younger generation and
catering to their requirements at various stages has evoked an
overwhelming response across the country, thanks to its novel features
and effective marketing strategies.
With a present complement of 22 Marketing Officers spread across 18
Regions, it is proposed to augment the strength of the Marketing set up
with campus recruitment and direct recruitments. In order to develop a
professional approach and to impart marketing skills among the
employees, Marketing Cell continuously studies various options for
training and re-skilling the staff, so that the Bank has a work-force
attuned to aggressive marketing of various products/ schemes.
18. General administration. Publicity and Public Relations
Banks General Administration Department is involved in enhancing the
ambience of existing branch premises besides furnishing new branches to
offer better customer comforts, so that bank can effectively compete
with other peer banks in business development.
Improved visibility by way of promotional endeavours in Print,
Electronic and outdoor media has been uppermost in the Banks agenda.
Bank has also been involved in supporting various social and cultural
events held across the country, releasing of promotional literature in
various journals, souvenirs of publishing houses and NGOs. The
visibility of the Bank has been all pervasive, including displays at
major locations and public places. Besides, the Bank also conducts
interactive sessions with press and media during events of significance
and actively makes financial contributions for worthy causes.
19. Customer Service and Complaints
The Bank has been endeavouring to provide quality service to the
customers. Customer complaints are redressed within 48 hours of
receipt. The Bank has since brought down the redressal time to 24 hours
and has been striving to translate the Complaints into Compliments.
In accordance with the RBI directives, the Bank has constituted a
Standing Committee on Customer Service. The Committee meets at
periodical intervals and deliberates on various issues relating to
Customer Service. Besides, a Customer Service Committee of the Board is
constituted to oversee the functions related to customer services. A
Customer Grievances Cell is also in place at the Banks Head Office
with a General Manager as the Nodal Officer and also in place at all
our Regional Offices headed by concerned Regional Heads for speedy
redressal of customer complaints. The Bank is also a member of Banking
Codes and Standards Board of India (BC&SBI).
20. Computerisation
All branches / offices of the Bank are computerized. The Bank is
constantly upgrading the systems to match the technological and IT
advancement in tune with its business needs as well as industry
practices. The Bank has initiated a number of IT related moves,
including implementation of Core Banking Solution and installation /
networking of ATMs. Service delivery has improved with the
introduction of Single Window concept, computerized printing of Pass
Books, Printing of Term Deposit Receipts and Demand Drafts etc.
Implementation of Core Banking Solution has improved various Customer
service aspects, apart from other benefits like flexible business
hours and option of ATM network.
IT initiatives/lnfotech Progress:
During the year under review, the Bank undertook the following new
projects:
Implementation of Integrated Treasury Management Software (ITMS) &
Liquidity Management System (LMS): During the year, the tender process
and selection of System Integrator were completed.
3 Implementation of Integrated Risk Management System (IRMS) including
Asset Liability Management (ALM) & Fund Transfer Pricing (FTP): The
tender process has already started after evaluation of eligible bids
and other modalities. The project is scheduled to commence during May
2008.
3 Implementation of Human Resources Management System: With the
selection process of the vendor having been completed, the Bank has
placed purchase order/letter of intent. The implementation of the
project has since commenced.
Implementation of CBS Extension Project:
Initially, the Data Centre (DC) of the Bank was designed to cater to
the business need of about 375 branches. The Disaster Recovery Centre
(DRC) was to the tune of 70% of the capacity of Data Centre. New CBS
extension project has been taken up to upgrade the Data Centre to
implement CBS at all branches/offices and to upgrade Disaster Recovery
Centre (DRC) to 100% capacity of Data Centre (DC).
Core Banking Solution:
As at March 2008, all the 1051 branches of the Bank were computerised.
Core Banking Solution has been implemented in additional 307 branches
during the year taking the total to 739 branches (Excluding 38
Extension Counters and 11 Service branches) covering 93.26% of Banks
business and 368 centres. During the financial year 2008-09, Bank has
plans to roll over all the remaining TBA branches to CBS and thereby
achieve the business coverage of 100%.
The Internet Banking Application that forms a part of CBS suite of
application has been customized, tested and implemented in the Bank. At
present, the Internet Banking services are offered to specific
customers. The facility covers services like funds transfer, balance
enquiry, e-payment of service tax, Central excise, direct taxes etc.
ATMs:
101 additional ATMs were installed during the financial year 2007-08
and the total number of ATMs as on March 31, 2008 was 272. The ATMs are
connected using BASE 24 FTS installed at Chennai and FTS-DR Site is
located at Mumbai.
Bank has entered into ATM sharing arrangements with National Financial
Switch consortium of IDRBT with effect from August 2, 2007, which is
having 29 member banks with 18695 ATMs as on March 31, 2008. The Bank
is in the process of issuing Debit-cum-ATM Cards to all eligible
operative account holders in CBS branches. To facilitate smooth banking
operations for farmers and to provide them banking service on 24 x 7
basis, ATM enabled Kisan Card was launched as a pilot project at
Coimbatore branch. Subsequently, the facility is being extended at all
CBS branches where Kisan Cards are issued.
Information Security:
The Bank has a well documented Security policy and Business Continuity
Policy, approved by the Board, in place. The Bank has been taking
measures proactively to protect its information assets regularly and
any vulnerability reported are being addressed immediately. Core
Banking channel handles all mission critical data and towards such an
objective, end-to-end data encryption has been installed. The Bank
monitors all the security incidents and is in the process of getting
ISO 27001 certification for its Data Centre. Apart from other
initiatives, the Bank also conducted DC-DRC mock drills to ensure
business continuity.
Others:
3 Connectivity - The Bank has provided E-mail facility to all the
Branches / Offices through Wide Area Network (WAN) or INET or Internet
facility.
3 Networking - 883 Branches / Offices of the Bank have been connected
through WAN as on March 31, 2008. The Network so established is used
for Core Banking Solution, various delivery channels like ATMs, Cash
Management Service and DP Back Office etc. Wherever connectivity is
not feasible through landline, alternative connectivity solutions such
as V-Sat has been implemented. So far V-Sat is provided to 34
remote/rural branches of the Bank.
3 Cheque Truncation - The first phase of implementation has already
commenced and Vijaya Bank is included in the second phase of
implementation as well.
3 Government Business- Under On-Line Tax Accounting System (OLTAS), the
Bank has implemented the project at all the 289 identified branches.
All the branches participating in OLTAS and those handling pension
payments are also computerized.
3 Bank has made considerable progress in MIS pertaining to CBS branches
and all the control returns, statistical reports and audit reports are
generated through the system for CBS branches.
3 INFINET -The Bank has set up the Payment Gateway for the INFINET.
INFINET backbone is being used for running critical applications like
Public Debt Office/ Negotiated Dealing System (PDO/NDS), Centralized
Funds Management System (CFMS), Structured Financial Messaging System
(SFMS), etc.
3 85 rural / semi urban branches have been provided with Solar Power
Generators to overcome power related problems such as non-availability
of sufficient power, frequent power cuts / failures etc.
21. Human Resources Management
Manpower & Staff Productivity:
Total staff strength of the Bank stood at 11439 as at March 2008 as
compared to 11330 in March 2007. Of the total staff, 4714 are Officers,
4399 Clerical Staff, 1802 Sub-staff and 524 Part-time Employees in the
subordinate cadre. The number of women employees as at the end of March
2008 stood at 1963 consisting of 639 Officers and 1324 Award Staff,
constituting 17.67% of total employees in the Bank. As at the end of
March 2008, there were 193 employees belonging to the category of
persons with disability and 489 employees belonging to Ex-Servicemen
Category.
Productivity, measured by Business per Employee as at March 2008 was
Rs.6.97 Crore as against Rs.5.47 Crore for the financial year ended
March 2007.
Recruitment:
During the year under review, Bank recruited two Deputy General
Managers - one each for Risk Management Department and Accounts
Department. A Principal for
Banks Staff Training College in the rank of Deputy General Manager was
also recruited. In addition to the above, the Bank has appointed two
Assistant General Managers - one each in Law and Treasury Management
Department and a Chief Economist in Asst. General Managers cadre, 15
Chief Managers and 269 Officers in various Grades/Scales in JMG Scale-I
to MMG Scale-Ill. The Bank has also recruited 83 Clerks out of which 8
are under Sports Quota and one under Compassionate Grounds and 114
under Sub-staff category.
Besides, the Bank has initiated recruitment process during the year
2007-08, the details of which are as under:
Cadre Scale Recruitment
Regular Campus
Asst Manager Scale-I 125 237
Clerks 212 91
Sub-staff - 125
Promotions:
The promotions effected during the year 2007-2008 are furnished below:
From SMG Scale-VI to TEG Scale-VII 06
From SMG Scale V to SMG Scale-VI 12
From SMG Scale IV to SMG Scale V 27
From MMG Scale III to MMG Scale IV 89
From MMG Scale II to MMG Scale III 150
From JMG Scale I to MMG Scale II 200
From Clerical Cadre (Sports Persons) to JMG Scale I in 05
Officers Cadre
From Sub-staff to Clerical Cadre 85
Training:
The training system in the Bank has been strengthened by providing
additional and competent manpower and increasing the budgetary
allocation for training. The training courses have been redesigned,
featuring inputs required for the employees to effectively handle the
present and future assignments and to perform their duties and
responsibilities more effectively in the highly competitive tech-based
and customer-driven banking environment. The Bank is also imparting
training to its employees through reputed external training
institutions in specialized areas like Treasury Management, Risk
Management, HR, Marketing, etc. During the financial year under
review, the Bank imparted training to 7644 employees, out of which 6786
employees had undergone training in the Banks own establishments and
858 were trained at reputed external training institutions, including
overseas institutions.
Human Resources Management System :
To enable faster decision making and error-free centralized employees
data management, the Bank made considerable headway in implementing an
HRMS (PeopleSoft) project with outsourced expertise.
SC/ST Employees :
Out of the total manpower of 11439 as at the end of March 2008, 1516
employees belonged to SC category and 560 to ST category. A separate
Cell for SC/ST has been created in Personnel Dept, HO to look into the
matters pertaining to the SC/ST employees and also to supervise prompt
implementation of Government of India guidelines in service matters in
respect of SCs/STs. SC/ST Cells are functioning in all the Regional
Offices as well. Each Cell has a designated liaison officer to attend
to the grievances of the SC/ST employees. At the Head Office, a General
Manager has been designated as the Chief Liaison Officer for SC/ST
employees in the Bank, duly assisted by a separate Cell consisting of
two Asst. General Managers and a Senior Manager. The Chief Liaison
Officer is involved in all the policy decisions concerning SC/ST
employees. Besides, quarterly meetings are held between representatives
of SC/ ST employees and the management, wherein the Bank is represented
by the Chairman and Managing Director and other officials. The Bank is
also arranging pre-recruitment/ pre-promotion training for SCs/STs
regularly. In view of the varied initiatives, the Bank has been able to
put in place a cordial and congenial environment for the
self-development of SC / ST employees and ensure their increasing
contribution to the growth of the organization.
Further, the Bank has designated a General Manager as Chief Liaison
Officer to attend the grievances of employees belonging to OBC and
Minority Communities.
Staff Relation :
The pro-active and humane approach adopted by the Bank in staff matters
has yielded positive results and the Bank is showing progressive growth
consistently with the collective efforts of the management and the
employees. The industrial relations climate has been positive, duly
reflected in the impressive growth of the Bank during the financial
year ended March. 2008. The consultative committee meetings and
negotiating committee meetings were held with the representatives of
the recognized unions at regular intervals to sort out the grievances
of the employees and to settle the disputes, if any, amicably.
Promotion of Sports Activities :
The Bank has been consistently patronizing sports activities among its
staff members. During the year, sports teams of the Bank have shown
outstanding performance at various events. The Banks Basketball Team
won 2 major All India Tournaments for Nachinuthu Goundar Cup and Ramu
Memorial Trophy. The team also won the prestigious State Association
Cup Basketball Championships for the 12th successive time.
The Banks Cricket Team won the State Division League tournament and
also won the BPCL All India Tournament held at Kochi.
The Banks Kabaddi team has won 2 All India and 4 State level
tournaments during the year. Sri. K. Manoj, Sri. Selvin, Sri. Dilip
and Sri. Prashanth K Rai have represented Banks Sports Board team and
Sri. Keerthi has represented Karnataka State for the National Kabaddi
Championship held at Amaravathi during 2007-08.
Among other noteworthy performances, Sri. S. Prakash has won 2 Silver
Medals in Senior State Weight lifting Championships held at Mysore and
Mangalore. Sri. Roshan P Thankachan and Sri. Sanjay Raj from the
Banks rolls represented the Indian team for the 24th FIBA ASIA
Basketball Championships held atTokushima, Japan, during August, 2007.
While Sri. Srinivasa Gowda, Sri. Roshan, Sri. Ashroff Ali, Sri.
Srinivas Nayak and Sri. Deivakumar represented the Karnataka State for
the National Basketball Championships held at Pondicherry, Sri. R.
Vinay Kumar represented Karnataka State Ranji team and has taken 41
wickets and reached the 100 wicket mark in Ranji Trophy. He has also
been selected as the BEST BOWLER in domestic circuit for the year
2007-08.
Sri. K. Manoj, was selected as Best Sportsperson - Third Place Award of
the Banks Sports Board - IBA for the year 2006-07.
Staff welfare Fund Trust:
The Vijaya Bank Staff Welfare Fund Trust was formed with effect from
01.01.2003 by executing a deed of declaration of Trust with an
objective of providing welfare facilities to the employees and their
dependents under various schemes as approved by the Board of Trustees
from time to time from out of the interest earned on the corpus of the
fund. Several welfare measures are extended to the members of the
Trust.
The corpus of the fund consists of yearly subscription payable by the
staff members and contribution made by the Bank upto 3% of the net
profit of the previous year with maximum of Rs.15 Crore.
22. Housekeeping
The Bank continued to do well in the area of house keeping during the
year under review. Balancing of books of accounts as on March 31, 2008
has been up-to-date and tallied. Reconciliation with regard to all
inter bank transactions have also been drawn upto December 31, 2007. As
against the Reserve Bank of India benchmark of six months for
reconciliation of outstanding inter branch entries, Banks present
status is 3 months. All outstanding entries under different sensitive
accounts are also being followed up promptly. Except entries relating
to pending court cases, all other long outstanding entries have been
eliminated.
23. Internal Inspection
A well organized inspection and audit machinery which provides adequate
support to the Management in exercising the required internal control
is in place in the Bank. Besides periodical Internal Inspection,
surprise inspections are conducted in between 2 regular inspections at
branches having aggregate advances of more than Rs.10 Crore. The same
is also supplemented by concurrent audit covering more than 50% of
total business of the Bank. Bank has also put the systems and practices
in place for Revenue audit, Computer Audit, Post Migration audit etc.
on an ongoing basis. In compliance with the Reserve Bank of India
directions, a Risk Based Internal Audit system is also put in place,
apart from undertaking portfolio audit of loans where immovable
properties are taken as security.
During the year 2007-08, 870 branches, 52 other offices and 7
Departments of Head office were subjected to general inspection.
Computer audit (IS audit) was conducted in 984 branches and post
migration audit was conducted in 198 branches. Apart from this,
concurrent audit was carried out in 179 branches and 5 departments of
Head Office. Risk Based Internal Audit has been conducted in 938
branches including offsite audit. The Bank was able to recover 98% of
leakage of income detected during the year by the inspecting
officials/auditors.
24. Internal Control Systems and Adequacy
The Bank is exercising internal control through the inspection and
audit system which serves the objective of ensuring safe and sound
practices and policies. The branches are being inspected by the Banks
Internal Inspectors once in a year in respect of Very Large and
Exceptionally Large Branches, once in 15 months in respect of large,
medium and small branches and once in 12 months in respect of branches
rated unsatisfactory. The fraud prone branches are being inspected
once in 6 months.
A parallel Risk based Internal Audit (RBIA) is also conducted along
with General Inspection and a Monitorable Action Plan is drawn up for
follow up/rectification of deficiencies in the branches.
The inspection and audit system put in place by the Bank is adequate to
assess the quality, risk as well as the quantum of business handled at
branches/offices.
25. Vigilance
The Vigilance Department at Head Office is headed by a Chief Vigilance
Officer of the rank of a General Manager. The Fraud Prevention &
Monitoring Cell is also functioning under the Vigilance Department. The
Vigilance Department oversees all vigilance work of the Bank as per the
guidelines stipulated by the Central Vigilance Commission. Cases of
frauds involving Rs. 1 lakh & above are placed before the Audit
Committee of the Board for discussion and reports are also sent to RBI
as and when frauds are detected and reported. The Board is also
apprised of frauds of Rs. 1 lakh & above on quarterly basis. In
compliance with RBI guidelines, a Special Committee of the Board is
constituted to review large value frauds involving Rs. 1 Crore & above.
During the financial year under review, a few frauds have been detected
and the Vigilance Department has informed the modus operandi to the
field functionaries as a preventive vigilance measure. All efforts are
made to plug the loopholes in the existing system so as to prevent
recurrence of similar frauds and to strengthen the preventive
vigilance.
26. Compliance
In terms of Reserve Bank of India Directions dated April 27, 2007 to
all the Banks, a Compliance Department has been set up in the Bank and
Chief Compliance Officer has been designated. A comprehensive
compliance policy has also been framed.
27. Right to Information Act - 2005
Government of India enacted the Right to Information Act, 2005 which
has come into force on October 12, 2005. The Act provides for right to
every citizen to secure access to information under the control of
public authorities, consistent with public interest. It aims to promote
openness, transparency and accountability in administration and in
relation to matters connected therewith or incidental thereto.
Atop executive of the Bank in the rank of General Manager was
designated as the Public Information Officer with the Executive
Director of the Bank as the Appellate Authority under the Act. Various
information sought under the Act are being provided within the
prescribed time frame. During 2007-08, the Bank received and disposed
of 177 applications and 17 appeals under the requirements of the Act.
28. Security Arrangement
Security Department of the Bank has been reviewing and strengthening
security arrangements at all the Currency Chests and branches on a
regular basis. Regional Security Officers have been conducting regular
branch security inspection to ensure that stipulated security measures
are complied with as per the IBA guidelines to protect Banks assets
against crime and any form of disaster. Further, security architecture
in the Bank has been made more effective by incorporating state-of-the
art security measures, such as, biometric access control system. Armed
Guards have also been posted to vulnerable branches, cash escort duties
and at Head Office. As part of the training exercise, firing practice
for Security Officers and Armed Guards at H.O. was carried out during
the year. The Bank has 29 currency chests under which police guards
have been provided to 27 currency chests and Private Security Agency
has been engaged for the remaining chests to keep round the clock
vigil. Access Control System at all Currency Chests has been
strengthened as per RBI guidelines. The Security Committees constituted
at Head office & Regional Offices also meet at regular intervals to
review and take timely security measures.
29. Progressive Use of Hindi
In recognition of the Banks performance in implementing Hindi Language
in Area C, the Reserve Bank of India has awarded First prize to Vijaya
Bank for the year 2006-07, under its Rajabhasha Scheme.
The participative efforts of the employees enabled the Bank to achieve
Hindi correspondence percentage of 93.60% in area A, 93.68% in area
B and 70.11 % in area C as on March 31, 2008. During the year, the
Bank continued to train existing stenographers in Hindi stenography
thereby increasing the number of stenographers knowing Hindi
stenography to 77 accounting for 86.52% of the total stenographers.
During the year under review, 999 employees of the Bank were trained
under 62 Hindi workshops.
The Bank hosted the Official Language Implementation Committee meeting
of South Based Nationalized Banks in its H.O. on December 3, 2007. It
also conducted a special Hindi workshop for executives at H.O. on
December 8,2007, in which 80 executives from Head Office took active
part. Apart from Head Office, the Banks Regional Offices at Delhi,
Mumbai, Kolkata and Bangalore also conducted Hindi workshop for
executives.
The Bank had organized a seminar on Role of Rajabhasha Hindi in
Innovative Banking with respect to Hindi language and Literature on
January 11, 2008 at Lucknow in which senior litterateurs, poets,
representatives from the Government of India and staff members of
various Banks and Government Departments at Lucknow participated.
Rajabhasha Seminars were also held at all the Regional Offices during
the year.
As regards notification of Offices under Rule 10(4) of O.L. Rules
1976, 56 Branches/Offices of the Bank were notified during the year
under review, taking the total number of such branches/offices of the
Bank to 967.
30. Visit of Parliamentary Committees
During the year, the following committees of Parliament visited the
Bank and held discussions with the Banks Top Management concerning
their respective areas of assignment:-
1. Department related Parliamentary Standing Committee on Industry
visited Hyderabad on June 6, 2007.
2. The third sub-committee of Committee of Parliament on Official
Language visited Banks Regional Office, Delhi on June 27, 2007.
3. Department related Parliamentary Standing Committee on Personnel
Public Grievances, Law and Justice visited Bangalore and Chennai during
November 11-14,2007.
4. Study Tour of Standing Committee on Finance to Mumbai, Goa and
Bangalore during January 10-16, 2008 in connection with Flow of credit
to Agriculture sector.
5. Parliamentary Standing Committee on Government Assurances, Lok
Sabha to Bangalore from February 3-5, 2008 in connection with the Lok
Sabha unstarred question No.850 and 3006 regarding the unutilised
amount in Banks.
6. Department related Parliamentary Standing Committee on Industry
visited Kolkata, Hyderabad, Mumbai and Jaipur from February 4-13, 2008
in connection with the implementation of the Policy package to step up
credit to SME sector and other related issues.
The Committees in general appreciated the Banks efforts under key
areas and suggested measures to further improve upon the same.
31. Board Meetings and Meetings of other Sub Committees of the Board
During the year, 10 Meetings of the Board of Directors, 10 Meetings of
the Management Committee of the Board, 6 Meetings of the Audit
Committee of the Board, 4 Meetings of the Directors Promotion
Committee, 5 Meetings of the Risk Management Committee of the Board, 3
Meetings of the Committee to Review Large Value Frauds of Rs.1 Crore
and above, one Meeting of the Remuneration Committee, one Meeting of
the Nomination Committee, 3 Meetings of the Customer Service Committee,
4 Meetings of the Shareholders/ Investors Grievances Committee and 12
Meetings of the Share Transfer Committee were held. The deliberations
in these meetings were constructive and fruitful.
32. Board of Directors
During the year 2007-08, the following changes have taken place in the
composition of the Banks Board of Directors:
i. Shri G.B. Singh, Deputy Secretary (BO.I) , Ministry of Finance,
Department of Financial Services, New Delhi was appointed as Director
Vice Shri A.K.Rai, w.e.f. August 20, 2007.
ii. Shri Mallikarjuna S. Madinur, Workmen Employee Director ceased to
be the Director w.e.f. November 2, 2007.
iii. Shri P. Shantharam Shetty was appointed as Workmen Employee
Director w.e.f. November 2, 2007.
iv. Shri Nishank Kumar Jain was appointed as Part Time Non Official
Director w.e.f. January 3, 2008. The Banks Board as at March 31, 2008
comprises of the following Directors :-
i. Shri Prakash P. Mallya, Chairman & Managing Director
ii. Shri T. Valliappan, Executive Director
iii. Shri G.B Singh, Government Nominee Director
iv. Shri K. Venkatappa, RBI Nominee Director
v. Shri Brij Mohan Sharma, Non Official Director under Chartered
Accountant category.
vi. Shri Ashok Kumar Shetty, Shareholder Nominee Director
vii. Shri Ashok Kumar, I.A.S., (Retd.), Shareholder Nominee Director
viii. Prof. R. Vaidyanathan, Shareholder Nominee Director
ix. Shri P. Shantharam Shetty, Workmen Employee Director
x. Shri Nishank Kumar Jain, Non Official Director The Board of
Directors place on record their appreciation for the valuable services
rendered by Shri A. K. Rai and Shri Mallikarjuna S. Madinur during
their tenure as Directors of the Bank.
Acknowledgement
The Board of Directors place on record their appreciation for the
excellent support and co-operation extended to the Bank by all
customers, shareholders, staff members, financial institutions and
other Banks, the Reserve Bank of India, the State Governments and the
Government of India in improving its overall performance during the
year 2007-08.
For and on Behalf of the Board of Directors
Head Office, Bangalore Prakash P. Mallya
Dated, the 26 April, 2008 Chairman & Managing Director
|
|
 | |
| Source : Religare Technova | |
| |